Cases where an Investment Review Contract (IRC) is not required under the 2020 Investment Law.

Correctly identify cases where IRC is not required An Investment Registration Certificate (IRC) is a strategic step that helps businesses streamline administrative procedures and shorten the time to enter the Vietnamese market. According to current regulations, not all business activities involving foreign elements are required to apply for an IRC – a process that typically involves lengthy review periods and complex documentation.

Understanding which projects are exempt from this procedure allows investors to go straight to the Enterprise Registration Certificate (ERC) issuance process, significantly saving on startup costs. This article will provide a self-checking checklist, a visual comparison table, and detailed answers based on the following criteria. Investment Law 2020 and Decree 31/2021/ND-CP to accurately determine the cases where IRC is not required.

How to determine if your project does not require an IRC?

To determine whether a project is eligible for exemption from investment registration procedures, investors can quickly check using the following set of criteria:

• Investor: If you are a Vietnamese national or an economic organization with 100 percent domestic capital, the project is usually exempt from this procedure.
• Foreign ownership ratio: For businesses with FDI capital but where the foreign investor's ownership stake is less than 50 percent and does not fall under the special cases in Article 23, this is usually the case. cases where IRC is not required Because the business is subject to the same procedures as domestic investors.
• Specific investment options: If you are making capital contributions or purchasing shares in an existing Vietnamese company instead of establishing a new legal entity to carry out an independent project, you typically follow the procedure under Article 26 instead of applying for an IRC.
• Type of cooperation contract: If you sign a BCC contract but all participating parties are domestic investors, the project will be exempt from the IRC requirement.
• Project scope and scale: This project does not require approval of investment policy from the National Assembly, the Prime Minister, or the Provincial People's Committee.

When does the law require a project to apply for an IRC?

Before delving deeper into the topics... cases where IRC is not required, Investors need to clearly understand the mandatory scope of this document. The Investment Registration Certificate is a document recording the investor's registration information regarding a direct investment project in Vietnam. Investors should carefully review it. When do I need to request an IRC? To prepare a suitable itinerary.

Based on Article 37 of the 2020 Investment Law, the following entities are required to carry out the procedures for granting and preparing... Application for Investment Certificate This includes the following groups:

1. Foreign investment projects include individuals of foreign nationality or organizations established under foreign law.
2. Investment projects of economic organizations as stipulated in Clause 1, Article 23, include enterprises with foreign capital holding more than 50 percent of the charter capital or with an ownership structure where foreign entities hold controlling power.

The following groups of cases do not currently require IRC issuance?

Identifying the correct target group allows businesses to focus on the Enterprise Registration Certificate (ERC) issuance procedure. To optimize the process, investors should clearly differentiate between them. What is the difference between IRC and ERC? The aim is to shorten the preparation time from 15 to 30 working days. Below is a detailed analysis for each group. cases where IRC is not required:

1. Investment projects by domestic investors

According to Article 37 of the Investment Law, projects by domestic investors are not required to go through the IRC issuance procedure. Domestic investors include individuals with Vietnamese nationality and economic organizations without foreign investors as members or shareholders. This group only needs to carry out the business establishment procedure or change the business registration details on the ERC at the Business Registration Office under the Department of Planning and Investment.

2. Projects of economic organizations as stipulated in Clause 2, Article 23 of the 2020 Investment Law.

This is a group of FDI enterprises with a low percentage of foreign capital. Specifically, economic organizations with foreign investment that do not fall under the category of holding more than 50 percent of charter capital will follow the same investment conditions and procedures as domestic investors.

When launching a new project, this team is often seen as cases where IRC is not required. However, businesses need to carefully review the market access conditions and the list of restricted business sectors for foreign investors as stipulated in Article 22 of Decree 31/2021/ND-CP to ensure compliance.

3. Investment in the form of capital contribution, share purchase, or purchase of capital contributions.

Instead of establishing entirely new investment projects, many investors opt for mergers and acquisitions (M&A). In this scenario, this is typically the case. cases where IRC is not required Because the investor will take the following alternative steps:

• Register your capital contribution: Investors must follow the procedures for registering capital contributions and share purchases as stipulated in Article 26 of the Investment Law if the target enterprise operates in a conditional business sector or if the capital contribution increases the foreign ownership ratio to over 50 percent.
• Recorded on the business license: After completing the capital contribution registration, the business directly updates the information of members or shareholders on the Enterprise Registration Certificate (ERC).

4. Investment in the form of BCC contracts between domestic investors.

A Business Cooperation Contract (BCC) is a form of investment that does not establish a legal entity. It is important to note the following key differences regarding investment registration obligations:

• For domestic BCC contracts: If the contract is signed between domestic investors, this project is exempt from the IRC.
• For BCC contracts with foreign capital: In cases where a BCC contract involves at least one foreign investor, the project must still go through the IRC issuance procedure as stipulated in Article 27 of the 2020 Investment Law.

Comparison table of cases requiring and exempt from IRC.

To provide investors with a clear overview, below is a summary table of the obligations for obtaining an Investment Registration Certificate based on the core criteria of current law:

Table 1: Classification of obligations for issuing Investment Registration Certificates according to participating entities for the following: cases where IRC is not required.

After reviewing the table above, investors should note that even if exempted, businesses must still meet the requirements regarding land use planning, environment, fire safety, and specialized licenses for conditional business sectors.

Frequently Asked Questions about IRC waivers (FAQs)

Below is a summary of legal issues that investors frequently encounter when researching the conditions for exemption or reduction of Investment Registration Certificates and related matters. cases where IRC is not required:

Legal advice to optimize the investment process.

Understanding whether your project belongs to cases where IRC is not required Whether or not an IRC is required offers a significant advantage in terms of deployment speed. However, the line between being exempt from and being required to have an IRC can change based on capital structure or when there is a need to submit one. Application for amendment of Investment Registration Certificate after that.

Based on practical experience from experts at MAN – Master Accountant Network, To ensure compliance, investors should take the following steps:

1. Review the list of restrictions: Carefully review Decree 31/2021/ND-CP regarding the maximum foreign ownership ratio permitted for each specific business sector code.
2. Ensure ERC conditions are met: The business registration documents need to be prepared in conjunction with the initial investment plan to clearly identify whether the project falls under the category of... cases where IRC is not required or not.
3. Post-inspection procedures: Exemption from IRC does not mean exemption from reporting obligations. Businesses are still required to submit periodic reports to the National Investment Information System as stipulated.

Note regarding business sectors and cases where an IRC is not required.

Even if the project does not require an IRC, businesses must still pay close attention to market access conditions. Ignoring sub-licenses or violating maximum foreign ownership limits can lead to serious legal risks during operation.

Conclude

Accurately determine if the project belongs to cases where IRC is not required Whether or not this is a crucial step in helping businesses be more flexible in managing capital flows and business plans. The 2020 Investment Law has opened up many favorable mechanisms, especially for economic organizations with small-scale FDI capital and indirect investment forms.

If investors still have concerns about their specific situation or need to review their capital structure to optimize procedures, please contact reputable consulting firms such as MAN – Master Accountant Network. We will assist in accurately verifying investment registration obligations, ensuring your project operates legally and sustainably right from the start.